Not Just a Technical Rebound, Here's Why Bank Shares Suddenly Surged

The Jakarta Composite Index (IHSG) reversed course into the green during Friday’s trading session, buoyed by a surge in banking stocks. Market participants assessed that the strengthening of the banking sector was driven by a combination of technical sentiment, fundamentals, and a positive investor response to Bank Indonesia’s (BI) commitment. The IHSG initially opened in the red but managed to turn things around by the end of Session I. Citing Refinitiv data, the IHSG began Session II with a gain of 1.32%, or approximately 80 points, to a level of 6,188.33. The financial and energy sectors were the main pillars supporting the index’s advance during the day. The rise was in line with the soaring shares of major banks, which made the largest contribution to the IHSG’s strengthening. Shares of PT Bank Mandiri Tbk (BMRI) rose 3.94%, PT Bank Rakyat Indonesia Tbk (BBRI) surged 3.85%, and PT Bank Negara Indonesia Tbk (BBNI) strengthened 2.29%. These banking stocks contributed more than 50 points to the IHSG’s rise in afternoon trading. Panin Sekuritas analyst Elandry Pratama said the recent strengthening of banking shares was driven by a combination of several factors. According to him, the banking sector is experiencing a technical rebound after previously coming under significant pressure, prompting investors to begin accumulating again, especially in large bank stocks with strong fundamentals and high liquidity. In addition, the pressure from foreign capital outflows has begun to appear more limited compared to previous periods. This condition provides room for investors to re-enter big-cap banking stocks and improve market sentiment. From a fundamental perspective, Elandry assessed that expectations for improved liquidity, potential recovery in credit growth, and increasingly attractive bank stock valuations served as additional catalysts for the sector. He also mentioned that sentiment related to the High Shareholding Concentration (HSC) policy contributed to a positive perception of increased transparency and quality in the Indonesian capital market. “Nevertheless, investors still need to pay close attention to external factors such as the direction of global interest rates, rupiah movements, and the sustainability of foreign capital flows to see whether the strengthening of the banking sector can continue,” Elandry told CNBC Indonesia on Friday. Meanwhile, Head of Research at Kiwoom Sekuritas Indonesia, Liza Camelia Suryanata, assessed that the strengthening of banking shares was also influenced by a positive investor response to statements made by Bank Indonesia Senior Deputy Governor Destry Damayanti at the CNBC Indonesia Investment Forum 2026. “Finally, foreign investors heard the senior deputy governor speak directly about guaranteeing that Indonesian banks will not bear BI’s losses in the rupiah stabilisation scheme,” Liza stated. Previously, at the event held in the Main Hall of the Indonesia Stock Exchange (BEI) on Wednesday, Destry revealed that BI had entered the offshore Non-Deliverable Forward (NDF) market since April 2026 as part of efforts to stabilise the rupiah. “Since April, BI’s breakthrough was entering the NDF market 24 hours a day, 6 days a week. We use overseas representative offices to enter and monitor the NDF,” Destry said. According to Destry, BI entered the NDF market with the help of representative offices abroad, including in Singapore, Hong Kong, and New York. In addition, BI also granted an exemption from the prohibition on selling foreign currency against the rupiah in offshore NDF transactions for certain qualifying primary dealers of the Money Market and Foreign Exchange Market (PUVA). This policy was pursued to support rupiah exchange rate stability and deepen the domestic financial market. “In the context of monetary stabilisation, they can sell NDF but cannot buy cover in DNDF; it is voluntary in nature. Why primary dealers? Because they have a relationship with BI and many are also involved with LCT and so on,” Destry explained. Besides the offshore NDF relaxation for PUVA dealers, BI also expanded its foreign currency monetary operation instruments with spot and swap instruments in Offshore Chinese Renminbi (CNH) against the rupiah.